Family Care Hospitals Ltd Management Discussions

OVERVIEW AND HEALTHCARE LANDSCAPE

The Indian healthcare service delivery ecosystem continues to undergo long-term structural evolution. This shift is primarily driven by macro-demographic transitions, expanding urbanisation, and changing consumer expectations across all vertical tiers. The domestic economy has demonstrated resilience, providing a stable baseline environment for health infrastructure and delivery networks.

Concurrently, healthcare delivery formats are evolving from traditional, asset-heavy physical medical setups toward flexible, technology-driven diagnostic and pharmacy service integrations This structural shift offers sustainable opportunities for scalable healthcare platforms that lower entry barriers, enhance corporate resource management, and provide cross-functional administrative efficiency to meet the rising demand for accessible care.

OPERATIONAL OVERVIEW AND DIGITAL TRANSFORMATION

During the period under review, Family Care Hospitals Limited has focused on navigating a significant structural transition. Following legal and operational developments that led to the closure of physical multi-specialty clinical operations at its flagship facility, the company has actively pivoted toward nonphysical healthcare delivery models. The primary operational focus has been redirected toward maintaining, developing, and deploying its online healthcare applications and digital platforms.

By shifting workflows toward software integrations and digital networks, the company continues to leverage its established network built over previous business cycles. The current operational strategy centers on integrating advanced software features and technological tools into its mobile applications. This approach aims to provide personalized experiences, seamlessly link patients with external diagnostic setups, and deliver healthcare solutions directly to a wider consumer base. This flexible digital framework is designed to preserve corporate infrastructure, lower variable overheads, and maintain market presence until a suitable alternative brick-and-mortar premise can be established.

FINANCIAL SUMMARY AND REVIEW

The financial performance for the period under review directly reflects the operational changes associated with the suspension of physical hospital workflows and the ongoing transition to a technology-driven format. Financial recording has been consistently compiled in strict conformity with Indian Accounting Standards (Ind AS) on a going concern baseline.

The halt in clinical in-patient treatments resulted in a compression of core operational revenues compared to previous cycles. For the financial year ended March 31, 2026, the company recorded a net loss after tax of Rs. 868.28 lakhs. This current deficit follows a net loss of Rs. 4,414.53 lakhs recorded in the preceding financial year, which arose primarily from the extensive write-offs and initial closure effects of the Mira Road facility.

In response to this reduced revenue throughput, management implemented strict cost-containment measures and rationalized operational expenditures. These steps included workforce restructuring, scaling down employee benefit outlays to Rs. 49.17 lakhs (down from Rs. 217.76 lakhs in the previous cycle), and cutting back on variable administrative costs and site maintenance overheads. The ongoing corporate focus is dedicated to optimizing remaining cost structures, enhancing capital efficiency, and scaling digital application revenues to balance long-term financial performance.

CAPITAL EFFICIENCY AND BALANCE SHEET DYNAMICS

The financial matrix and balance sheet configurations reflect the corporate adjustments and operational transition currently underway:

• Liquidity and Capital Structure: The balance sheet reflects tighter near-term liquidity conditions, driven by a change in current asset allocation and an expansion of outstanding trade payables.

• Leverage and Capital Employed: Total equity structures have experienced compression due to the accumulated losses recorded during the current transition period. This pattern has led to changes in leverage ratios and negative returns on capital employed, highlighting the financial impact of the site transition

• Asset Assessment: Current assets include a substantial ledger allocation for specific marketing and distribution materials. The ultimate recovery and realization of these current asset balances remain closely tied to future distribution capabilities, market expansion, and the eventual re-establishment of physical healthcare facilities.

SPECIFIC LITIGATION AND REGULATORY PROCEEDINGS

The company operates within a complex legal framework and is actively engaged in handling and resolving several material legal disputes and enforcement actions:

• Mahim Lease Rent & Eviction Suit: The company is defending execution proceedings in L.E. Suit No. 58 of 2019 before the Honble Small Causes Court at Mumbai regarding a historical lease arrangement. Under the initial lower court directive dated September 27, 2021, the company was ordered to deposit accumulated rent arrears totaling approximately Rs. 368.00 lakhs. Following a subsequent challenge via Writ Petition No. 1114 of 2024, the Honble High Court of Judicature at Bombay sustained the directive. Due to non-deposition, the Small Causes Court issued a distress warrant under Order XXI Rule 43 of the Code of Civil Procedure targeting the attachment of movable properties. Companys legal counsel is taking appropriate steps.

• SEBI Compliance Adjudication: The Securities and Exchange Board of India (SEBI) issued an Adjudication Order against the company levying a penalty of Rs. 15.00 lakhs resolved in May 2024, followed by a subsequent multi-noticee Adjudication Order dated June 3, 2025, carrying a cumulative joint penalty of Rs. 35.10 lakhs for technical non-compliances under SEBI listing and disclosure parameters. The company has fully cleared the penalty obligations and is pursuing appropriate appeal strategies.

• Outstanding Tax Demands: Standard appeals are actively being processed against tax demand notices, which include a Rs. 76.55 lakhs indirect tax demand from the State GST department (Assessment Year 2018-19) and dual summary direct tax notices under Section 143(1) totaling Rs. 162.31 lakhs for recent assessment cycles.

INTERNAL CONTROLS, CYBER SECURITY, AND HUMAN RESOURCES

The management maintains a framework of internal financial controls based on documented policies and regular administrative reporting. Systemic audits indicate that while baseline reporting structures are functional, ongoing efforts are directed toward further strengthening integrated operational and financial controls.

In early 2026, the companys information technology infrastructure experienced a security disruption from an external malware incident. In accordance with required listing protocols, the event was promptly disclosed to the stock exchange. Management immediately initiated updated data security protocols, deploying, advanced access controls, and cloud compliance mechanisms to reinforce system integrity against future risks.

Regarding workplace parameters, corporate administrative operations have been strictly streamlined to match the current technology focus

Routine corporate tracking, board evaluation, and complete alignment with the laws have been systematically maintained, with zero complaints reported during the financial year.

OUTLOOK AND REVIVAL STRATEGY

As the company moves into the next operational phase, the primary and immediate focus of management is the comprehensive revival of the overall situation. To rebuild organizational strength and address financial headwinds, the company is actively pursuing a dual recovery map. On one track, efforts are underway to resolve ongoing legal and regulatory hurdles through appropriate legal channels. On the operational track, management is striving to systematically commercialize its technology products, attract new digital consumers, and build up sustainable capital reserves. By stabilizing exposures and expanding the digital footprint, the company aims to restore systemic stability and enhance stakeholder value over the coming cycles.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys projections, transition strategies, or revival paths may constitute "forward-looking statements" within the meaning of applicable securities laws. Actual corporate results may differ materially from those expressed or implied due to various external risk vectors. Key factors that could influence future outcomes include the final settlement of pending litigations, results of regulatory appeals, structural capital availability, general economic conditions in India, and the competitive landscape of the digital healthcare delivery market. The Company assumes no obligation to update or revise any forward-looking statements based on subsequent events.